Mortgage Lending – Page 7 – Consumer Financial Services Watch

HUD Issues Self-Reporting Guidance

Nov 18 2013

Last Thursday, HUD issued Mortgagee Letter 2013-41 to clarify its self-reporting requirements for FHA-approved lenders. The Mortgagee Letter updates HUD’s prior guidance regarding an FHA-approved lender’s obligation to self-report instances of fraud, material misrepresentations, and material findings identified in connection with the origination, underwriting, or servicing of FHA-insured loans. New guidance set forth in this Mortgagee Letter includes direction on the timeframes to which lenders must adhere in reporting findings to senior management and to HUD, as well as clarification regarding what constitutes a “mitigated” finding in connection with the self-reporting requirements. Read More

Proposed Castle & Cook Settlement on Alleged Loan Originator Compensation Violations

Nov 07 2013

By: Kristie D. Kully

The Consumer Financial Protection Bureau has proposed a settlement with Castle & Cook Mortgage and two of its officers. The CFPB brought an action against Castle & Cook and those officers, alleging that they violated the prohibition against loan-term based compensation under the Dodd-Frank Act and its regulations. On November 7, 2013, the parties to the action proposed a settlement to the federal court in Utah for the payment by the company and the officers of over $9 million for redress to affected consumers, plus a $4 million civil money penalty. The company and officers would also be permanently enjoined from paying compensation to a loan originator in violation of the applicable regulations, and would have to retain evidence of their compliance. According to the proposed settlement, although it would resolve the issue with the CFPB, consumers’ rights to seek redress on their own behalf against the company and/or the officers would not be limited. Read More

Federal Regulators Alleviate Fair Lending Concerns Regarding QM Origination

Oct 23 2013

By: Stephanie C. Robinson, Andrew L. Caplan

Recognizing that many creditors will be inclined to originate only “qualified mortgages” (“QM loans”) when the CFPB’s ability-to-repay rule takes effect in January, five federal regulators yesterday announced that a creditor’s decision to offer only QM loans will not elevate the creditor’s fair lending risk, absent other factors. Read More

HUD Issues QM Proposal for Comment: There is a “There” There

Oct 07 2013

By: Phillip L. Schulman, Jonathan D. Jaffe, Krista Cooley, Andrew L. Caplan

This week, the United States Department of Housing and Urban Development (“HUD”) weighed in on its proposed version of a Federal Housing Administration (“FHA”) Qualified Mortgage (“QM”). Although the Consumer Financial Protection Bureau (“CFPB”) rules gave FHA-insured loans QM status on a temporary basis until 2021 (subject to certain conditions, discussed below), it looks like HUD wanted to get its version finalized by January 2014, when the CFPB’s QM rules take effect. As discussed more fully in this alert, HUD’s proposed QM Rule (the “HUD Proposed Rule”) would give QM status to all single family, forward FHA-insured loans. Title II insured loans, however, would be required to meet the CFPB’s 3% limit for points and fees.

In an attempt to expedite synchronization of the HUD QM definition with implementation of the CFPB Final Rule, HUD shortened the usual 60-day comment period to 30 days. As such, comments on this proposal are due by Wednesday, October 30, 2013.

To read the full alert, click here.

Township of Mount Holly: The United States Supreme Court Considers Whether the Fair Housing Act Recognizes Disparate-Impact Liability

Sep 05 2013

By: Paul F. Hancock, Andrew C. Glass, Melanie Brody, John L. Longstreth, Roger L. Smerage

On September 3, 2013, K&L Gates LLP filed a brief as amici curiae before the United States Supreme Court in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., a case in which the Court will consider whether the Fair Housing Act recognizes a disparate-impact theory of liability. The brief addresses the effect that the Court’s recognition of the disparate-impact theory would have on the residential mortgage lending industry and was filed on behalf of the American Financial Services Association, the Consumer Mortgage Coalition, the Independent Community Bankers of America, and the Mortgage Bankers Association. A copy of the as-filed brief is available here. The Court is likely to schedule oral argument in the matter for late 2013 or early 2014.

To read the full alert, click here.

Supreme Court Takes Mount Holly Disparate Impact Case

Jun 17 2013

By: Stephanie C. Robinson

Today, the Supreme Court granted certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507, agreeing to consider whether the Fair Housing Act allows claims under the disparate impact theory of discrimination. The disparate impact doctrine imposes liability on defendants for actions undertaken without discriminatory intent but which nonetheless have an allegedly disproportionately harmful effect on protected classes of persons.

CFPB Addresses Double-Counting of Loan Originator Compensation in Points and Fees

Jun 04 2013

By: Kristie D. Kully , Anaxet Y. Jones

Earlier this week, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule (the “Final Rule”) that attempts to fix the double-counting problem when including loan originator compensation in the points and fees calculation for Qualified Mortgages (“QMs”) and high-cost loans under Section 1026.32 (“HOEPA Loans”). Read More

Solicitor General Urges Supreme Court to Reject Mt. Holly Case; Argues No Review Is Needed as to Whether the Fair Housing Act Recognizes Disparate Impact Claims

May 22 2013

By: Andrew C. Glass, Roger L. Smerage

In an increasingly complex battle among the branches of the federal government, the Solicitor General recently urged the Supreme Court to deny certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507. The Mt. Holly matter seeks review of whether the Fair Housing Act recognizes a disparate impact theory of discrimination and if so, how courts are to analyze such claims. A disparate impact theory imposes liability on defendants for actions that are undertaken without discriminatory intent but that nonetheless have a disproportionately harmful effect on particular groups of individuals. The Supreme Court had previously granted certiorari to review these same questions in the appeal titled Magner v. Gallagher, No. 10-1032, which appeal the defendants subsequently withdrew under circumstances garnering review by Congress.

Consumer Financial Services Group Highlights Key Legal Issues at MBA Conference

May 16 2013

Members of the K&L Gates Consumer Financial Services Group will speak on key topics at the upcoming MBA Legal Issues and Regulatory Compliance Conference in Boca Raton, FL (May 19-22).

Melanie Brody will discuss a topic on everyone’s radar — fair lending and disparate impact — on Tuesday morning (May 21) , with a repeat session on Tuesday afternoon . Melanie also will facilitate a fair lending roundtable discussion on Tuesday afternoon.

Paul Hancock will address major litigation and enforcement trends on Monday afternoon (May 20).

Philip Schulman will speak at the Government Housing round table on Monday afternoon (May 20) about FHA Landmines, including the perils to the Online Annual Certification, the increase in False Claims Act cases against approved mortgagees, and indemnification demands of Lender Insurance participants.

Nanci Weissgold will participate on both the Sunday (May 19) and Tuesday (May 21) panels on the CFPB National Servicing Standards (“NSS”) and other servicing requirements. Come to the dive deep session on Sunday afternoon for an overview of the RESPA and TILA provisions of the NSS. On Tuesday, Nanci will focus on non-default servicing standards, including challenges with implementing error resolution, information requests, record retention and general policy and procedure requirements.

In addition, many of our group’s attorneys are attending the conference. We look forward to seeing you all in Boca!

NMLS Advance Notice Release

May 09 2013

By: * Stacey L. Riggin
Ms. Riggin is not admitted to the practice of law.

On May 8, 2013, the Conference of State Bank Supervisors published release notes for a June 24, 2013 Nationwide Multistate Licensing System (“NMLS” or the “System”) upgrade which includes, among other changes, an advance filing feature that will permit state licensees to file advance notice of certain business changes electronically through the NMLS. Presently, state licensees must submit advance notices in hard copy paper format outside the System. This upgrade should ease the burden on state licensed entities to provide advance notice and, where applicable, secure prior approval of, changes in officers, directors and direct or indirect shareholders. The advance notice filing feature also may be used in connection with a legal name change, office relocation and organizational changes. Not only will this help to facilitate the notification process, but the advance filing feature should significantly enhance the method by which state regulatory agencies can process and approve these changes. This is welcome news to the industry after the release of the upgrade was postponed earlier this year.

Although this change will allow for filings regarding transactions that have a future effective date to be made and processed through the NMLS, the new process will add a layer of complexity to certain transactions where state law only requires that notice be submitted, as the System will require that state regulators check-off a box to approve or accept the change. Administrators of the NMLS have indicated that they are willing to consider a change in the System to distinguish filings requiring approval from those that require mere notice, but those changes cannot be implemented before the “roll-out” of this new feature.

Catagory:Mortgage Lending